TaxTMI 
TaxTMI 
1991 (10) TMI 152
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....nt etc. which are excluded from the definition of inputs in the Explanation under Rule 57A. In the appeal before us, it has been contended that these goods are used by the respondents for making the surface of their product, paper, smooth and for absorbing the excess contents of water in the pulp and that they are neither used as input nor raw material in or in connection with manufacture of paper. Therefore, these goods are in the nature of appliances and equipments used for bringing about change in a substance and hence MODVAT credit is not admissible. It has, therefore, been urged that the Order-in-Appeal be set aside and the Assistant Collector's Order-in-Original upheld. 2. Shri M.N. Biswas, learned S.D.R. argued the Collector's case when the appeal was heard by us. He adopted the reasoning contained in the appeal memorandum and pleaded that the appeal be allowed. 3. Shri S.K. Bagaria, learned Counsel for the respondents gave a strong counter to the contentions raised in the appeal. He submitted that the goods in question had been classified by the Assistant Collector in his Order-in-Original under Tariff Heading 5909. Under Chapter 59, Textile fabrics and Textile'articl....
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....57A. He referred to the judgment of Bombay High Court in Vishal Electronics Pvt. Ltd. v. Union of India, reported in 1989 (44) E.L.T. 420 wherein It had been held that exemption to Television camera was not extendable to lenses. Lenses are no doubt parts of the camera but all the same they were not treated as the camera which was the exempted item. In so many Tariff Headings and Notifications where the intention is to cover parts also they have been specifically included. In Rule 57A only machines, machinery tools etc. are mentioned but parts are not. Proceeding further, Shri Bagaria fairly conceded that two Tribunal decisions are directly against him. These are (1) Collector of Central Excise, Patna v. Ashim Paper Products, 1990 (50) E.L.T. 120 (Tribunal); (2) Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, 1990 (50) E.L.T. 252. In the former case decided by a Single Member Bench of this Regional Bench itself Wire Mesh and industrial cloths used for removing moisture from the wet pulp were held to be in the nature of appliances. The learned Counsel submitted that in view of the arguments advanced by him about the scope of the term 'appliances' which term appears in....
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....hra Sugar Ltd., 1990 (50) E.L.T. 289. (7) Travancore Cochin Chemicals Ltd. v. Collector of Central Excise, 1990 (50) E.L.T. 172. (8) Collector of Central Excise v. Bharat Aluminium Co., 1987(29) E.L.T. 569. He also raised a legal point that the notice for the alleged wrong availment of credit having been issued on 16-2-1988 in respect of credits utilised in March, May and July, 1987 was time barred there being no allegation of any suppression fraud etc. He relied upon the decision of this Bench in Collector of Central Excise, Patna v. TELCO reported in 1990 (28) E.C.R. 522 for this stand taken by him which he submitted was an alternative ground without prejudice to the arguments advanced by him on the merits of their case. He, therefore, pleaded that the department's appeal be dismissed. 5. Shri M.N. Biswas, learned S.D.R. gave his rejoinder to the contentions raised by Shri Bagaria. He contended that the scope of the term machine, machinery etc. which the learned Counsel had extracted from the Section and Chapter Notes and headings of the Central Excise Tariff have no application to MODVAT matters. The said notes are for a limited purpose as stated in the Notes themsel....
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....cisions as well as the definitions of various terms and other material made available by the respondents in the Paper Book. 7. The solution to the present problem lies in the correct interpretation of the terms "used in or in relation to the manufacture of and the scope of the expressions 'machine', 'machinery' etc. which are referred to specifically in the Explanation clause under Rule 57A as not being included within the scope of the term "inputs". Pausing here for a moment, we take note of the submission in the appeal that the items in question are/were neither used as input nor as raw material in or in connection with manufacture of paper. This argument advanced for pressing the point that MODVAT credit is, on that score, not available thereon, is totally untenable. Nowhere in the scheme of the MODVAT provisions is there any requirement that the goods should be used as raw material. The term 'input' figures in Rule 57A as an abbreviation to refer to "goods used in or in relation to the manufacture of the final products". Nothing then turns on the actual meaning of the term 'inputs'. The specific provision in the Explanation clause under Rule 57A that the term 'inputs' does n....
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....Bombay High Court decision in the case of SVA Viniyog relied upon by Shri Biswas which have been referred to in para 5 supra do not advance his argument that the principles laid down in the said judgments would justify the treatment of the goods in question as machinery. The Supreme Court in the above mentioned case, had observed as follows :- "Therefore, the word 'marble' has to be interpreted, in our considered opinion, in the scientific or technical sense and not in the sense as commercially understood or as meant in the trade parlance. There is no doubt that the general principle of interpretation of Tariff Entries occurring in a text statute is of a commercial nomenclature and understanding between persons in the trade but it is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding should be departed from in a case where the statutory content in which the Tariff Entry appears, requires such a departure. In other words, in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word was used then the said principle of interpretation should not be applied. ....
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....ssed below. In Bhandari v. State of Mysore, the Hon'ble High Court of Mysore referred to their own earlier decision in State'of Mysore v. M.N.V. Rao wherein they had taken note of the dictionary meaning of the term 'machinery'. It was found that the term applies to mechanical contrivance containing several parts, each expected to make certain operation. In the judgment of the Privy Council in Corporation of Calcutta v. Cossipore Municipality it was observed that machinery is a contrivance whereby several things are put together to work in such a way that force may be applied to get a particular work done or manufacture goods. In Engineering Traders v. State of U.P. (1973) 31 S.T.C. 456,1973 UP TC 91 the dictionary meaning of machinery as a machine in general or a functioning unit was referred to. Machinery in a generic sense includes all appliances and instruments whereby energy or force is transmitted and transformed from one point to another. In that sense, it will include simple appliance like a lever to a complicated machinery employed in mills and factory. It was held that pumping sets were machinery. The Hon'ble Gujarat High Court had held in Ambica Wood Works v. State of Guj....
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....ither the use of the term "electrodes" to describe them suggesting a connection with electricity, nor their utilisation in a process involving application of electrical power convert them into electrical goods as contemplated by the Entry in the Madras Act. Going by the analogy of the Madras judgment the present products which are articles of textile material, the duty paid on which as such textile material is sought the benefit of MODVAT credit, cannot be equated with the machinery nor can it be considered a part of such machines. The Kores decision regarding typewriter ribbon not being a part of typewriter in the context of the Mysore Sales Tax Act would also support the view that machine cloths are not to be treated as parts of the paper making machines. 12. Shri Bagaria had referred to a series of decisions where goods used in a machine in the manufacturing process had been granted the benefit of MODVAT credit e.g. Oxygen and acetylene gases used in welding process. The contention of the department that such gases are in the nature of tools for cutting etc. was rejected. Again, certain more tangible and more durable items like Titanium metal anodes, Aluminium " Cathodes, Alu....
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....erprises". Under the caption "Non-fibrous raw materials" a number of items like water, fuel, power and paper-making chemicals and for pump mills, pulping and bleaching chemicals are referred to. Other consumed materials mentioned are felts and wires for the paper machines and washers tolls spare parts etc. Felts and wires which are same as industrial cloth and wire mesh used for manufacture of paper are thus treated as same articles. However, the question whether machine cloth etc. are consumable goods or not is immaterial for deciding MODVAT admissibility. Only relevant test would be whether they are used in or in relation to the manufacture of paper and if so whether they stand excluded from the definition of inputs as given in the Explanation clause under Rule 57A. Though in the foregoing discussions, we have dealt extensively with these questions and held that they are not excluded, the question requires to be further examined in view of the point raised by Shri Biswas with reference to the decision of the South Regional Bench of the Tribunal in Sathya Steel Strips v. Collector of Central Excise, reported 1988 (38) E.L.T. 485. 17. In the Sathya Steel Strips case the goods fo....